Sunday, June 6, 2004

Profit Pays Off

Retail ventures helping boost nonprofits' bottom line

By Cliff Peale
The Cincinnati Enquirer

Laura Petri checks a tag as Jennifer Morena shops. The bank employees visited the 4th Street Boutique during its Shop the 4th event.
The Cincinnati Enquirer/MEGGAN BOOKER
WALNUT HILLS - The new Building Value store on Gilbert Avenue may look like a mini-Home Depot, but there's no corporate owner in Atlanta adding to its bottom line.

Instead, annual profits of more than $100,000 after three years from the sale of new and used building products will go to another kind of owner - the Work Resource Center in Cincinnati.

The center has been helping people with disabilities and disadvantages find jobs since it was founded as the STAR Center in 1972. But starting when Building Value LLC opens June 21, Work Resource Center will join nonprofits around the country in recognizing a double bottom line: One serving its mission and the other strictly sales and profits.

Building Value will only help, and center officials think it will build to sales of $1 million a year within five years and turn profitable sometime in Year 2. It also will provide retail and construction experience for the Work Resource Center "participants," who will help in the store, breaking down donated materials to prepare for sale and helping customers.

The best financial value is an unrestricted flow of revenue, said Lisa FitzGibbon, president and chief executive officer at Work Resource Center.

"I believe all nonprofits that are successful now and expect to be in the future need to be run like businesses," she said.

A social enterprise

With public funds tighter every year and private donors besieged with requests for help, nonprofits in Greater Cincinnati and across the country are facing similar decisions. That "social enterprise" is on the rise, experts said.

Nationally, 42 percent of nonprofits are operating some sort of earned-income venture, generating an average of 12 percent of the annual operating budget, according to a new survey from the Partnership on Non-Profit Ventures, a program of the Yale University School of Management and the Goldman Sachs Foundation.

One of those is Dress for Success, a Cincinnati nonprofit that provides clothes to women for jobs and job interviews. It reaps more than $15,000 in profit a year, about 5 percent of its annual operating budget of about $350,000 from the downtown 4th Street Boutique, which sells used clothing.

"Its mission is to sustain Dress for Success," founder Mary Ivers said. "The one thing I had in excess was all this clothing. I was donating it to churches, and they were selling it. When you're in this young of a program, you have to explore multiple avenues of sustainability."

Generating new revenue streams is the key to long-term financial health, said Samantha Beinhacker, deputy director of the Partnership on Non-Profit Ventures. Dress for Success and the Work Resource Center were finalists in a national business-plan competition sponsored by the Partnership this year, with the Work Resource Center earning a $25,000 runner-up prize.

"Clearly, the economy is tough these days, and they're looking for other revenue streams that can help the nonprofit further its mission," Beinhacker said. "It enables the nonprofit to become a bit more entrepreneurial, thinking on its feet."

"More than a junk store"

That's the idea at Building Value, which is in a 16,000-square-foot warehouse space adjacent to Work Resource Center's offices at 2901 Gilbert Ave.

There, Work Resource Center serves about 17,000 people a year, with about 150 participants on the work floor at any time.

In the new space, there already is a set of antique doors donated by a local church, which will be sold for about $1,200 a pair. Prices will be less than half of those at a traditional retail store, and there's a space set aside for "deconstruction" of products that come from local construction sites.

"We're going to make it as close to a retail experience as we can, more than a junk store," said Wayne Bollinger, retail manager.

Originally, the business model was to target low-income homeowners, but that changed after visits with similar re-use centers around the country.

"Through our planning process, we kind of had an 'aha' moment," development director Pam Green said. "If we target this to low-income homeowners, how often are they going to re-do their kitchen?"

The Work Resource Center is raising more than half a million dollars in start-up costs. But when it's operating fully, Building Value will not only contribute to the current operating budget of more than $6 million, but it will provide job training for about a dozen participants.

Terrell Johnson, who participates in the center's High School/High Tech program, is interviewing for a training program for Building Value.

"They told me I could learn about the cash register," said Johnson, 18. "I really want to learn about that."


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